Dubai Is Well-Positioned To Accommodate 36000 Additional Hotel Rooms.

Dubai’s hotel industry is preparing for a lot of activity, and it is not just about keeping the rooms and suites open to receive more visitors. In what industry insiders refer to as the “next golden age” of the industry. There is a lot of activity going on in terms of new hotel projects being completed.

Key Points

In the first half of 2024, the world’s tallest hotel with 1,000 rooms will open. The First Group, which has been active over the years in the construction of hotels in the city, is the company behind the 365-meter-tall “Ciel” structure in Dubai Marina. (By the way, Dubai is already home to the tallest hotel towers in the world.)

A record-holder, the One Za’abeel, will have its hotel tower ready by year’s end under the “One&Only” super-luxury name before Ceil opens. (Due to having the tallest cantilever, the project is given a spot in the Guinness World Records.)

In addition, most recently, the Atlantis the Royal, with its elevated range of experiences and quite a distinctive perspective on architecture design, became Dubai’s newest destination resort.

So how quickly can Dubai construct new hotels? How quickly the hospitality industry can absorb all of the new rooms is also crucial.

“Dubai has reached critical mass. Brand Dubai is well-established and highly sought after,” said Faisal Durrani, Partner and Head of Middle East Research at the consulting firm Knight Frank. With 140,000 keys, Dubai has one of the largest densities of hotel rooms in the world. Incredibly, occupancy rates are consistently among the highest in the world.

The Dubai Airport is also on track to reach pre-Covid records, solidifying its status as the busiest international airport in the world for 15 years running.

In addition to the 140 000 rooms, some 36,000 more are being built or planned. Since they are becoming popular destinations for mixed-use development, Dubai South and Expo City are likely to see an increase in the number of these five-star city hotels/resorts.

Create And Fulfill Urgent Demand

The demand for hotels in Dubai, whether for travel or business, is anticipated to last far longer than typical market cycles. Geopolitics and how it is now unfolding could aid them in this.

Philip Wooller, Area Director for the Middle East and Africa at hotel consulting firm STR, stated that the UAE, particularly Dubai, has experienced a significant economic upswing across all sectors, thanks to the favorable global geopolitical situation. Despite the addition of 25,000 hotel rooms since 2019 (and 36,500 since 2018), the demand has remained steady. The hotel industry’s success is a clear indication that Dubai is currently the world’s most preferred city. With average room prices (ARR) close to Dh800 and higher than in New York, London, and Paris, year-to-date occupancy rates are slightly over 83%. According to Wooller, “despite having by far the largest new supply increases in the last three to four years.”

‘Serviced’ Homes Also Support

Start a hotel and have a residential component in it. Organize everything under one famous hospitality brand. Launching off-plan for the dwellings is one more thing.

Developers in Dubai and increasingly in other emirates have begun using this method. Such affiliations, whether with a Fairmont, One&Only, or St. Regis, are beneficial. Especially in light of the fierce competition for the interest and money of international investors.

Additionally, it gives developers the opportunity to raise money to support project construction. Off-plan sales are another factor in maximizing market visibility. If home sales are successful, they can shorten the payback period for developers. Relative to what they might anticipate in a stand-alone hotel project.

“It is encouraging seeing the market diversification that is taking place, including the serviced and micro-apartment segments,” said Nils Heckscher, Managing Director, Head of Africa and the Middle East, PKF hotel group.

The ‘digital nomad’ population that is pouring into the UAE is becoming more and more interested in mixed-used buildings and serviced living options. There are also branded residences, two hotel brands housed in the same structure, and hotels that are becoming more and more well-liked for their residential units.

For instance, the growing number of digital nomads demands a tiny kitchenette in their hotel rooms. The ‘workcation’ trend is likewise becoming more and more popular.

The hotel developers in Dubai will keep an eye on all trends, both established and emerging. Why not, if each of these trends may maintain the surge during the boom times for hotels?